The price growth of an “asset” into which investors everywhere around the globe have poured billions since the financial crisis has slowed dramatically, and this should worry policymakers.
Housing markets in certain developed economies are beginning to lose steam, prompting worries that house prices might see corrections, especially in countries where they had been overheating.
The issue of the runaway Swedish housing price bubble has been well known for a while, and the problem just keeps growing bigger. At this point, however, any attempt to tackle it could make things worse.
The residential property bubble continues in countries like the UK and Sweden, but it seems to have spread to some other countries as well, according to data from the Bank for International Settlements.
A look at Sweden’s housing market highlights the huge risks that are building up in the Nordic country. It also serves as a warning for the UK, as house prices in south-east England hit record highs.
The Swedish property sector is overheated and could pop, taking the banks down with it.
“Fake havens” have mushroomed in the continuous search for safe investments that offer some yield, after years of money-printing by the world’s major central banks.
But investors should be wary of them, says Alberto Gallo, a strategist with RBS. He lists five fake havens that could suffer a correction in the coming months.
Investors should avoid Nordic banks because they are dealing with the unravelling of credit and housing bubbles in the region, with various degrees of distress, according to a strategist.